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Chapel Hill, N. C. — Adverse life events, such as unemployment, unexpected expenses and medical bills are primary reasons that lower-income households decide to file for bankruptcy, according to findings by researchers at the UNC Center for Community Capital and UNC School of Law.

Center research director Mark Lindblad shared findings from the study, “Coping with Adversity:  Personal Bankruptcy Decisions of Lower-Income Homeowners Before and After Bankruptcy Reform,” with students, faculty and staff at a N.C. State University colloquium today (Nov. 7).

Lindblad was one of a list of speakers from diverse disciplines invited to share their expertise and research for N.C. State’s Psychology in the Public Interest Program. Speakers come from universities, research institutes and community organizations.

The Psychology in the Public Interest Program seeks to expose graduate students and faculty to innovative state-of-the-art research and innovative conceptualizations regarding how person-environmental fit issues work in concert to influence numerous behavioral outcomes. The program focuses on issues related to community psychology, human systems development, social inequality, and innovation and technology.  Action-oriented methods are emphasized and guided, not by disciplinary considerations research and alone, but also by a pragmatic desire to produce knowledge and solutions that serve the public interest.

The center’s study revealed that medical problems and lack of health insurance are key contributors to bankruptcy for lower-income households. Their motivation and experience are relevant as policymakers debate strategies to restore economic stability in the United States, particularly to housing markets.

Some experts have proposed bankruptcy reforms that allow the restructuring of mortgages of primary residences as the most effective way to deal with a fundamental fact that continues to weaken the recovery: one quarter of all homeowners with mortgages owes more than the house is worth. Such a change to federal bankruptcy law might particularly benefit low- and moderate-income and minority homeowners with subprime mortgages, a group disproportionately affected by the foreclosure crisis.

The study report is available on the center’s Web site.

The UNC Center for Community Capital, the leading center for research and policy analysis on the transformative power of capital on households and communities in the United States. Part of the College of Arts and Sciences at the University of North Carolina at Chapel Hill, the center offers data and analysis that helps policymakers, advocates and the private sector find sustainable ways to expand economic opportunity to more people more effectively. For more information, visit or call (919) 843-2140.

Topics(s): Affordable Homeownership, Mortgage Finance
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